Mumbai, October 8, 2026: PL Capital’s research team has projected a 41.2% quarter-on-quarter increase in aggregate EBITDA for the Indian oil and gas sector in Q2FY27, reaching INR 973.9 billion, driven by oil marketing companies (OMCs) and a resilient upstream segment, even as city gas distribution (CGD) firms face continued pressure from higher LNG costs.
The Jul-Sep’26 earnings preview anticipates aggregate sales for the sector’s coverage universe to rise 4.1% sequentially and 39.4% year-on-year to INR 10,541.1 billion. Estimated EBITDA and PAT stand at INR 973.9 billion and INR 457.3 billion, respectively, reflecting year-on-year declines of 5.6% and 11.1%, but significant quarter-on-quarter improvements of 41.2% and 51.9%. PL Capital has maintained an Overweight rating on the sector, with Mahanagar Gas Limited (MGL) and Indraprastha Gas Limited (IGL) as its preferred CGD picks.
Crude price rally and refining margins
Brent crude averaged US$86.0 per barrel in July-August 2026, but renewed tensions between the US and Iran in September pushed prices to a peak of US$108.8 per barrel, resulting in a Q2FY27 average of US$91.4 per barrel, down from US$96.9 in Q1FY27. PL Capital expects the elevated crude environment to support upstream earnings for Oil and Natural Gas Corporation (ONGC) and Oil India, though sequential moderation is likely. ONGC’s Q2FY27 EBITDA is estimated at INR 260.2 billion, compared to INR 294.5 billion in the previous quarter.
Global refining margins remained high in Q2FY27 due to tight product balances and supply constraints. Post-SAED cracks for MS, HSD and ATF averaged US$31.4, US$38.7 and US$40.9 per barrel, respectively. Gross refining margins (GRMs) are estimated at US$20.8, US$19.2, US$15.4 and US$11.2 per barrel for Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Mangalore Refinery and Petrochemicals (MRPL), respectively.
OMC and CGD performance outlook
PL Capital expects IOCL and BPCL to report EBITDA of INR 94.0 billion and INR 21.3 billion, respectively, compared to INR 20.2 billion and an EBITDA loss of INR 40.8 billion in Q1FY27. HPCL is forecast to post an EBITDA loss of INR 20.9 billion, while MRPL’s EBITDA is projected to rise to INR 23.3 billion from INR 13.2 billion quarter-on-quarter. Marketing margin losses are expected to narrow to INR 3.5, INR 3.6 and INR 3.6 per litre for IOCL, BPCL and HPCL, respectively, down from INR 12.8, INR 16.3 and INR 14.9 per litre in Q1FY27. LPG under-recoveries are likely to remain high but lower than the previous quarter.
CGD companies are expected to remain under margin pressure due to higher LNG costs, despite resilient volumes. Spot LNG prices rose to US$22.1/MMBtu in Q2FY27 from US$17.7/MMBtu in Q1FY27, driven by disruptions in the Strait of Hormuz and increased demand from Europe and Asia. EBITDA per standard cubic metre (scm) is estimated to decline to INR 2.4 for IGL, INR 7.0 for MGL and INR 4.5 for Gujarat Energy, down from INR 3.4, INR 7.9 and INR 5.2 in Q1FY27. IGL and MGL volumes are expected to grow 2.1% and 1.9% quarter-on-quarter, respectively.
Gas utilities and Reliance Industries estimates
GAIL is forecast to report transmission volumes of approximately 126 mmscmd in Q2FY27, up from 122.4 mmscmd in Q1FY27, with EBITDA expected to moderate to INR 46.7 billion from INR 63.8 billion due to normalisation in the trading business. Petronet LNG’s utilisation is projected to improve to around 62% from 60%, with total regasification volumes rising to 215 TBtu from 207 TBtu and EBITDA estimated at about INR 14.5 billion, compared to INR 15.3 billion in Q1FY27. Reliance Industries’ consolidated EBITDA is expected to grow 3.4% quarter-on-quarter to INR 491.4 billion, with standalone EBITDA remaining largely flat at INR 195.4 billion.
Sector ratings and outlook
PL Capital has raised its FY28E EPS estimates for ONGC and Oil India on the back of higher crude oil realizations and revised its FY27E EPS estimates for OMCs upwards. The firm has cut FY28E EPS estimates for MGL and IGL by approximately 1-4%. BPCL has been upgraded to Accumulate from Hold, and HPCL to Hold from Reduce. MGL and IGL remain the preferred CGD picks, supported by strong CNG and PNG volume growth, which is expected to accelerate as gas supply constraints ease and price hike impacts are fully realised.
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